PHANTOM FIBER CORPORATION filed this 10KSB on April 15, 2005

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                          U.S. SECURITIES AND EXCHANGE
                        COMMISSION Washington, DC. 20549

                                   FORM 10-KSB

         [ X ]    ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                  OF THE SECURITIES AND EXCHANGE ACT OF 1934

                  for the fiscal year ended December 31, 2004

         [    ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
                   THE SECURITIES EXCHANGE ACT OF 1934
         For the transition period from _________ to ___________

                       Commission File Number: 0001-15627

                            Phantom Fiber Corporation
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


                 Delaware                              04-2451506
     -------------------------------      ------------------------------------
     (State or other jurisdiction of      (I.R.S. Employer Identification No.)
      incorporation or organization)


                           144 Front Street, Suite 580
                        Toronto, Ontario, Canada M5J 2L7
                    ----------------------------------------
                    (Address of principal executive offices)

                                 (416) 703-4007
                           ---------------------------
                           (Issuer's telephone number)

 Pivotal Self Service Technologies Inc., 13980 Jane Street, King City, Ontario,
                                 Canada, L7B 1A3
 ------------------------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed since last
                                     report)

Securities registered under Section 12(b) of the Exchange Act:

                                                   Name of each exchange
            Title of each class                     on which registered
            -------------------                    ---------------------
                   N/A                                     N/A

       Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, par value $.001

<PAGE>

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
                                                                  Yes [X] No [ ]

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.  [X]

         State issuer's revenues for its most recent fiscal year: $ 98,417

         References in this document to "us", "we", "our", or "the Company"
refer to Phantom Fiber Corporation.

         State the aggregate market value of voting and non-voting Common Stock
held by non-affiliates of the registrant as of April 13, 2005: Common stock,
$.001 par value: $ 15,544,564

      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

         Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ____ No ____

         The number of shares of the Company's Common Stock outstanding as of
April 13 , 2005: 268,009,730 shares.

         Documents incorporated by reference: None

         Transitional Small Business Disclosure Format: Yes [ ]   No [X]


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                                TABLE OF CONTENTS

PART I

Item 1.  Description of Business ............................................. 4

Item 2.  Description of Property ............................................. 4

Item 3.  Legal Proceedings ................................................... 4

Item 4.  Submission of Matters to a Vote of Security Holders ................. 5

PART II

Item 5.  Market for Common Equity and Related Stockholder Matters
         and Small Business Issuer Purchaser of Equity Securities ............ 5

Item 6. Management's Discussion and Analysis or Plan of Operation ............ 6

Item 7. Financial Statements .................................................12

Item 8.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure ................................................12

Item 8A. Controls and Procedures .............................................12

Item 8B.  Other Information ..................................................12

PART III

Item 9.  Directors and Executive Officers ................................ ...13

Item 10.  Executive Compensation .............................................14

Item 11.  Security Ownership of Certain Beneficial Owners and Management......15

Item 12. Certain Relationships and Related Transactions ......................17

Item 13.  Exhibits ...........................................................18

Item 14:  Principal Accountant Fees and Services .............................19

Financial Statements ....................................................... F-1

Signatures....................................................................20

Exhibit Index ................................................................



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                                     PART I
ITEM 1. DESCRIPTION OF BUSINESS

         The business of Phantom Fiber Corporation (the "Company") (formerly
known as Pivotal Self Service Technologies Inc, Wireless Ventures Inc. and
Hycomp, Inc.) is conducted through its wholly-owned Canadian subsidiary Phantom
Fiber Inc. headquartered in Toronto Canada.

         Phantom Fiber is a leading developer of wireless software applications
and mobile solutions that empowers enterprises with high- performance
functionality on today's mobile devices and global communication networks.
Phantom Fiber has developed a wireless platform that extends the rich multimedia
content and user experience of existing Internet web sites securely and
instantly to PDAs and Cell Phones. Applications based on this platform can be
applied to any enterprise requiring a mobile solution. Instances of usage could
include remote monitoring, stock research, logistics and distribution, trading,
and gaming.

         The Company derives revenue through the sale of its proprietary
software and custom integration services. Its business model is to generate
initial revenue from integration/customization services and derive recurring
revenue from usage-based licensing. It approaches the industry with a low
implementation cost and utilizes a rapid deployment strategy through reusable
software objects. Phantom Fiber utilizes its proprietary Smart Streaming(TM)
data transmission technique to deliver high-speed client side performance that
intuitively adapts to device and network properties. Information is securely
packaged and delivered with complete end-to-end 128-bit encryption using today's
most advanced security techniques.

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company maintains its corporate executive offices at 144 Front
Street, Suite 580, Toronto, Ontario, Canada M5J 2L7 (Tel. 416-703-4007, Fax
416-703-0900). The offices are leased and are comprised of 6,200 square feet,
with a monthly rental of $8,000, expiring in April, 2009.

ITEM 3.  LEGAL PROCEEDINGS

         From time to time, the Company may become involved in various claims
and lawsuits incidental to its business. There are presently no material legal
proceedings pending or threatened against the Company.

         The Company is not a party to any material litigation, and there are no
material outstanding claims against the Company.

         As described in Note 11 b) of the Company's audited financial
statements, a specified level of working capital was to be available to fund the
Company's operations on a post-merger basis to December 31, 2004. Management is
negotiating terms with respect to this working capital requirement as well as
assessing the Company's alternatives. If the Company does not obtain the
specified level of working capital required, the Company may be required to
issue up to 40,000,000 additional compensatory shares of common stock to the
pre-merger stockholders of Phantom Fiber Corporation.

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ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company did not submit any matter to a vote of security holders
through solicitation of proxies or otherwise during the fourth quarter of the
fiscal year covered by this annual report.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS
ISSUER PURCHASE OF EQUITY SECURITIES.

MARKET.

         The Company is authorized to issue 400,000,000 shares of Common Stock,
$.001 par value per share. At December 31, 2004, there were 260,689,071, shares
of Common Stock issued and outstanding, held by 350 stockholders of record.

         The price per share of the Company's Common Stock is quoted on the
NASD's over-the-counter Electronic Bulletin Board under the symbol "PHMF".

The following table sets forth for the periods indicated the high and low
closing bid prices for its Common Shares in U.S. Dollars. These quotations
reflect only inter-dealer prices, without retail mark-up, mark-down or
commissions and may not represent actual transactions.

                ---------------------------------------------------
                QUARTER ENDED             HIGH           LOW
                ---------------------------------------------------
                March 31, 2003            $0.10         $0.05
                ---------------------------------------------------
                June 30, 2003             $0.08         $0.04
                ---------------------------------------------------
                September 30, 2003        $0.05         $0.01
                ---------------------------------------------------
                December 31, 2003         $0.04         $0.02
                ---------------------------------------------------
                March 31, 2004            $0.13         $0.03
                ---------------------------------------------------
                June 30, 2004             $0.18         $0.07
                ---------------------------------------------------
                September 30, 2004        $0.11         $0.03
                ---------------------------------------------------
                December 31, 2004         $0.10         $0.03
                ---------------------------------------------------

         The Company does not expect to pay a cash dividend on its Common Stock
in the foreseeable future. Payment of dividends in the future will depend on the
Company's earnings and its cash requirements at that time.

COMMON STOCK

         Holders of Common Stock are entitled to one vote for each share held on
all matters voted upon by stockholders, including the election of directors. The
holders of Common Stock have no preemptive rights to purchase or subscribe for
any stock of the Company now or hereafter authorized or for securities
convertible into such stock. All of the outstanding shares of Common Stock are
fully paid and nonassessable. Upon any liquidation of the Company, the holders
of Common Stock are entitled to share ratably in assets available for
distribution to such stockholders. Holders of Common Stock are entitled to

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<PAGE>

receive dividends out of assets legally available therefore at such times and in
such amounts as the Board of Directors may from time to time determine.

         Shareholders are not entitled to cumulative voting rights, and
accordingly, the holders of a majority of the voting power of the shares voting
for the election of directors can elect the entire class of directors to be
elected each year if they choose to do so and, in that event, the holders of the
remaining shares will not be able to elect any person as a director of such
class.

PREFERRED STOCK

         The Company has an authorized class of Preferred Stock comprised of
2,000 share of $100 par value, 8% that are non-voting, convertible and
redeemable. As of December 31, 2004, no shares of Preferred Stock were issued or
outstanding.

DIVIDEND RESTRICTIONS

         The terms of the instruments governing the future indebtedness of the
Company may contain restrictions on the payment of dividends and the making of
distributions on its capital stock (other than stock dividends) and the purchase
or redemption of outstanding capital stock of the Company. By reason of these
restrictions, the Company may be unable to pay dividends on its Common Stock for
some period, which cannot presently be estimated.

         The Company has not declared or paid any dividends on its Common Stock
and presently does not presently expect to declare or pay any such dividends in
the foreseeable future. The Company has not yet formulated a future dividend
policy in the event restrictions on its ability to pay dividends are created.
See "Dividends".

TRANSFER AGENT AND REGISTRAR

         The transfer agent and registrar for the Company is Corporate Stock
Transfer; 3200 Cherry Creek Drive South, Suite 430, Denver Colorado 80209
telephone (303) 282-4800.

         As long as the trading price of the Common Stock of the Company is
below $5.00 per share, the Common Stock is considered to be "penny stocks" that
are subject to rules promulgated by the Securities and Exchanges Commission
(Rule 15-1 through 15g-9) under the Securities Exchange Act of 1934. These rules
impose significant requirements on brokers under these circumstances, including:
(a) delivering to customers the Commission's standardized risk disclosure
document; (b) providing customers with current bid and ask prices; (c)
disclosing to customers the broker-dealer's and sales representatives
compensation; and (d) providing to customers monthly account statements.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

         Certain matters discussed in this Annual Report may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and as such may involve risks and uncertainties.
These forward-looking statements relate to, among other things, expectations of
the business environment in which the Company operates, projections of future

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<PAGE>

performance, perceived opportunities in the market and statements regarding the
Company's goals. The Company's actual results, performance, or achievements
expressed or implied in such forward-looking statements may differ.

CURRENT BUSINESS AND OUTLOOK

         Phantom Fiber develops interactive mobile technology that allows users
to experience internet-like graphics and internet-like speed in an end-to-end
secure solution for multiple mobile platforms. Phantom Fiber's customers include
network carriers such as Wind (Italy) and Telus Mobility (Canada), and online
casino and sports book service providers such as Golden Palace, Real-Time
Gaming, WagerWorks, Interactive Gaming and Wagering, Digital Gaming Solutions,
1X Sportsmarkets, IQ-Ludorum, CaribSports, and Parlay Entertainment. It also has
clients in the financial and mobile payments vertical and security and
remote-monitoring industry. Phantom Fiber's gaming and sports book customers
typically enter into exclusive multi-year, revenue-sharing agreements, under
which they use Phantom Fiber's technology to offer games to their subscribers
and are charged a monthly user fee or percentage of the revenues or income
generated from those games.

         In the latter half of 2004, the Company shifted its focus and resources
to the areas of marketing, brand-awareness, client expansion and site
deployment. In the past year, the number of mobile phones and Personal Digital
Assistants (PDA's) supported by Phantom Fiber's software has increased from 20
devices to over 600 handheld mobile phones and PDA's. Management believes that
ongoing success will stem from two areas: contract fulfillment through client
deployments; and ongoing product development to expand its technical
differentiators and increase its industry advantages. The Company intends to
continue to enhance its product offering and to introduce new features and
products, as the market demands. As part of its product development process, the
Company works closely with its customers and its distribution channels to ensure
that such market needs are met or exceeded.

         Based upon the strong customer responses received to date, management
believes that the Company is steadily gaining recognition as a leading provider
of advanced presentation and internet speed to the mobile market. Phantom Fiber
has concentrated on establishing revenue-sharing arrangements in a rapidly
growing market sector and believes that the prospects are favorable for an
appreciation in shareholder value to occur by virtue of increasing market share
and achieving sustained profitability.

RESULTS OF OPERATIONS

         The Company recorded a net loss during its fiscal year ended December
31, 2004 of $1,524,049 ($0.008 per share) compared to a net loss of $273,743
($0.002 per share) for the same period in the preceding year. The Company's
transition from a predominantly product development enterprise commenced in the
second half of the fiscal year ended December 31, 2004. The net loss for the
year ended December 31, 2004 had been anticipated by management as a result of
the reverse acquisition, investing in product development and support,
organizational infrastructure and establishing new customer outlets for product
distribution.

         Total revenue increased $46,580 from $51,837 for the year ended
December 31, 2003 to $98,417 for the year ended December 31, 2004. The largest
proportion of revenue in both these periods was derived in North America.

         Total operating expenses increased $1,593,536 from $325,580 for the
year ended December 31, 2003 to $1,919,116 for the year ended December 31, 2004,
an increase of 489%. The increase includes:

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      *     An increase in net research and development expenses to develop new
            software products of $668,808 from $(96,550) for the year ended
            December 31, 2003 to $572,258 for the year ended December 31, 2004.
            Major increases in various expense categories for the fiscal year
            ended 2004 occurred in salaries, benefits and fees to full-time and
            contract professional staff (approximately $350,400) and third-party
            software licensing expenses (approximately $4,200), offset by net
            decreases in other expense categories of approximately $1,000. In
            addition, research and development expenses for the year ended
            December 31, 2004 were reduced by approximately $303,200 with
            respect to cash refundable government tax credits on qualified
            research and development activity. By comparison, research and
            development expenses for the year ended December 31, 2003 were
            reduced by approximately $618,400 with respect to cash refundable
            government tax credits on qualified research and development
            activity. In 2004 and upon becoming a public company, the Company's
            became entitled only to cash refundable provincial tax credits for
            eligible expenditures, whereas in 2003 the Company was entitled to
            cash refundable federal and provincial government tax credits.

      *     An increase in sales and marketing expenses to develop new
            distribution channels for the Company's products of $175,939 from
            $149,162 for the year ended December 31, 2003 to $325,101 for the
            year ended December 31, 2004. Major increases in various expense
            categories for the fiscal year ended 2004 arose in salaries and
            benefits (approximately $206,700), advertising and promotions
            (approximately $5,300) market research (approximately $9,800) and
            net increases in other expenses categories (approximately $100)
            offset by reductions in consulting services of approximately $39,100
            and in travel expenses of approximately $6,900.

      *     An increase in general and administration expenses of $748,789 from
            $272,968 for year ended December 31, 2003 to $1,021,757 for the year
            ended December 31, 2004. This change includes increased office and
            general (approximately $557,000, of which $420,000 pertained to an
            augmentation of the Company's investor relations program and
            $108,000 pertained to accruals for wage arrears and vacation pay),
            professional fees incurred in connection with completion of the
            reverse acquisition, preparation and filing of the Company's Form
            10-KSB and attendant financial and legal services (approximately
            $51,000), increased interest on long-term debt and capital leases
            (approximately $69,400), increased office rental and occupancy
            expenses (approximately $39,400), increased salaries and benefits
            chiefly as a result of adding two administrative staff
            (approximately $30,000), increased bank charges and interest on
            short-term borrowings (approximately $29,800), and net increases in
            other expense categories (approximately $12,400), offset by a
            reduction in consulting services of approximately $40,200).

         During the year ended December 31, 2004, the Company recorded a gain on
disposal of its Battery Division of $391,874 (2003: $nil), a further earnout
relating to the divestment of the Battery Division of $35,500 (2003: $nil) and a
foreign exchange gain of $62,060 (2003: $nil) arising from the translation of
the Company's Canadian dollar denominated assets into US dollars during periods
of weakening of the US dollar vis-a-vis the Canadian dollar, offset by a loss on
disposal of marketable securities of $109,534 (2003: $nil) and settlement of a
loan obligation of $83,250 (2003: $nil).

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<PAGE>

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The discussion and analysis of results of operations and financial
condition are based upon the consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America (GAAP). The preparation of these consolidated financial
statements requires management to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. Management evaluates the
estimates on an on-going basis, including those related to bad debts,
inventories, investments, customer accounts, intangible assets, income taxes,
and contingencies and litigation. Management bases its estimates on historical
experience and on various other assumptions that they believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Note 2 of the "Notes to
Consolidated Financial Statements" of the Company's annual audited Consolidated
Financial Statements includes a summary of the significant accounting policies
and methods used in the preparation of the consolidated financial statements.
The following is a brief description of the more significant accounting policies
and methods the Company uses.

Investments

         The Company's investment in marketable securities is classified as
available for sale securities. Unrealized holding gains and losses are reported
as a net amount in a separate component of shareholders' equity until realized.

Revenue Recognition

         The Company's revenue consists of software licensing fees and related
service revenues which are recognized when the "wireless middleware" product is
delivered or the service has been rendered and when the rights of ownership of
the product are transferred to the purchaser and collection is reasonably
assured.

Allowance for Doubtful Accounts

         The Company records an allowance for doubtful accounts based on
specifically identified amounts that management believes to be uncollectible.
The criteria for allowance provision are determined based on historical
experience and the Company's assessment of the general financial conditions
affecting its customer base. If the Company's actual collections experience
changes, revisions to the allowance may be required.

Intangible Assets

         Long-lived assets, including intangible assets, are reviewed when facts
and circumstances indicate that the carrying value of the asset may not be
recoverable. When necessary, impaired assets are written down to estimated fair
value based on the best information available. Fair value is determined by
estimated future cash flows and appraised value of the assets.

FINANCIAL CONDITION

         Total assets increased $932,200 from $511,924 at December 31, 2003 to
$1,444,124 as at December 31, 2004, an increase of 182%. The increase is due
primarily to an increase in marketable securities (approximately $962,600),
accounts receivable (approximately $20,900), prepaid expenses (approximately


                                       9
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$10,700) and increased property, plant and equipment (approximately $32,900),
offset by a reduction in cash of approximately $300 and a reduction in
investment tax credits receivable of approximately $94,600.

         At December 31, 2004, the Company held 1,145,000 common shares of
Wireless Age Communications, Inc., and 3,000,000 shares of Trackpower Inc., both
publicly traded entities whose share price is quoted on the NASD's
over-the-counter Electronic Bulletin Board under the symbols "WLSA" and "TPWR"
respectively. The Wireless Age securities were obtained in the sale of the Prime
Wireless subsidiary on March 13, 2003 and in the sale of the battery business on
September 14, 2004. The Company has valued these securities at $812,950 ($0.71
per share). The Trackpower securities were obtained as partial payment for a
receivable. The Company has valued these shares at $149,649 ($0.05).

         Total liabilities increased $1,300,745 from $344,502 at December 31,
2003 to $1,645,247 as at December 31, 2004, an increase of 378%, and reflects
liabilities assumed in the reverse acquisition as well as an increase in
short-term borrowings and accounts payable from operations. Major increases
arose in accounts payable and accrued liabilities (approximately $887,800),
short-term borrowings (approximately $203,800), notes payable (approximately
$109,700), senior subordinated convertible debentures (approximately $66,500)
and increases in capital lease obligations (approximately $33,000).

         Stockholders' equity decreased $368,545 from $167,422 at December 31,
2003 to ($201,123) at December 31, 2004, a decrease of 220%. The decrease is the
result of:

         1.       A reorganization of the equity accounts resulting from the
                  reverse acquisition of the Company. This reorganization
                  resulted in an increase to equity based upon the value of the
                  net assets acquired from Pivotal Self-Service Technologies
                  Inc. of $1,083,101;

         2.       Issuance of convertible debentures totaling 625,630;

         offset by

         1.       Unrealized loss on available for sale marketable securities of
                  $535,378;

         2.       The net loss of $1,524,049 during the year ended December 31,
                  2004; and

         3.       Unrealized foreign exchange translation losses of $17,849
                  (recorded in accumulated other comprehensive income).

         The consolidated financial statements of the Company are prepared in
conformity with generally accepted accounting principles, which require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Some of the significant estimates required
to be made by management include the realizable value of intangible assets and
the fair value of common stock and common stock equivalents issued for services
or in settlement of obligations. Actual results could differ from those
estimates.


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LIQUIDITY AND CAPITAL RESOURCES

         The Company reported a negative working capital of $229,601 at December
31, 2004 compared with a positive working capital of $154,748 at December 31,
2003 representing a decrease of $384,349, approximately 248%. As of December 31,
2004, the Company had cash and cash equivalents of $19,400 compared with cash
and cash equivalents of $19,742 at the end of the prior year, representing a
decrease in cash of $342.

         For the year ended December 31, 2004, cash used in operating activities
amounted to $849,455, primarily as a result of operating losses. Cash provided
by financing activities during the year ended December 31, 2004 amounted to
$689,368 resulting from an increase in short term borrowings of $203,784,
increases under capital lease obligations of $32,954 and increased common stock
under the convertible debenture of $625,630, offset by a reduction in notes
payable of $173,000. Cash provided by investing activities was $159,745 and was
chiefly derived from proceeds of sale of Wireless Age Communications, Inc.
common shares of $199,989 and cash assumed on the reverse acquisition of $5,541,
offset by an investment in property, plant and equipment during the year of
$45,785.

         At December 31, 2004, the Company did not have sufficient cash flow
from operations to satisfy its operational requirements and other cash
commitments. The Company has introduced expense reductions and anticipates
receiving further funding through term debt and/or the sale of its securities by
private placement and the exercise of outstanding warrants and options. There
can be no assurance that such funding sources will be secured or that the
necessary regulatory approval or closing of a private placement will occur, or
that such funding will be sufficient to eliminate the Company's reliance on
additional sources and quantities of funding. The Company has commenced
liquidating its investment in Wireless Age Communications, Inc. common shares.
These securities, which have been valued at $812,950 for balance sheet purposes,
have certain resale restrictions. Management believes that it will be in a
position to sell all of these securities within the next twelve months and
utilize the proceeds for working capital purposes.

         In addition, the Company has been successful in raising capital through
private placements of its common shares. Although, this type of financing
continues to be dilutive to the existing common shareholders, it may be
necessary to continue to do so in the interim before certain resale restrictions
on its marketable securities lapse.

         The Company does not have any material sources of liquidity on off
balance sheet arrangements or transactions with unconsolidated entities.

NEW ACCOUNTING PRONOUNCEMENTS

                  In December 2004, the FASB issued FASB Statement No. 123
(revised 2004), "Shared-Based Payment." Statement 123(R) addresses the
accounting for share-based payment transactions in which an enterprise receives
employee services in exchange for (a) equity instruments of the enterprise or
(b) liabilities that are based on the fair value of the enterprise's equity
instruments or that may be settled by the issuance of such equity instruments.
Statement 123(R) requires an entity to recognize the grant-date fair-value of
stock options and other equity-based compensation issued to employees in the
income statement. The revised Statement generally requires that an entity
account for those transactions using the fair-value-based method, and eliminates
the intrinsic value method of accounting in APB Opinion No. 25, "Accounting for
Stock Issued to Employees", which was permitted under Statement 123, as
originally issued. The revised Statement requires entities to disclose
information about the nature of the share-based payment transactions and the
effects of those transactions on the financial statements. The Company has not
yet evaluated the impact of adoption of this pronouncement which is effective
for the quarter beginning January 1, 2006.

         In December 2004, the FASB issued SFAS No. 153 "Exchanges of
Nonmonetary Assets-amendment of APB Opinion No. 29". Statement 153 eliminates
the exception to fair value for exchanges of similar productive assets and


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replaces it with a general exception for exchange transactions that do not have
commercial substance, defined as transactions that are not expected to result in
significant changes in the cash flows of the reporting entity. This statement is
effective for exchanges of nonmonetary assets occurring after June 15, 2005. The
Company will adopt this Statement in fiscal 2005 and adoption is not expected to
have a material impact on the Company's financial position, results of
operations, or cash flows.

         In November 2004, the FASB ratified the Emerging Issues Task Force
("EITF") consensus on Issue 03-13, "Applying the Conditions in Paragraph 42 of
FASB Statement No. 144. "Accounting for the Impairment or Disposal of Long-lived
Assets," in Determining Whether to Report Discontinued Operations." The Company
will adopt this Statement in fiscal 2005 and adoption is not expected to have a
material impact on the Company's financial position, results of operations, or
cash flows.

         In November 2004, the FASB issued SFAS No. 151 "Inventory Costs - an
amendment of ARB No. 43, Chapter 4". Statement No. 151 requires that certain
abnormal costs associated with the manufacturing, freight, and handling costs
associated with inventory be charged to current operations in the period in
which they are incurred. Statement No. 151 is effective for fiscal years
beginning after June 15, 2005. The adoption of SFAS 151 is not expected to have
a material impact on the Company's financial position, results of operations, or
cash flows.

ITEM 7. FINANCIAL STATEMENTS

         The consolidated financial statements of the Company for its fiscal
year ended December 31, 2004, are provided with this Form 10-KSB annual report.

ITEM 8.  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

         None.

ITEM 8A. CONTROLS AND PROCEDURES

         The Company maintains a system of disclosure controls and procedures
that is designed to provide reasonable assurance that information, which is
required to be disclosed, is accumulated and communicated to management in a
timely manner. Management has reviewed this system of disclosure controls and
procedures, and believes that the system is operating in an effective way to
ensure appropriate and timely disclosure.

         There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

ITEM 8B. OTHER INFORMATION

         Not applicable.


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                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.

The directors and officers of the company are as follows:

Name                     Age     Position
----                     ---     --------
Jeffrey T. Halloran      43      Director, Chief Executive Officer and President
Vince Bulbrook           46      Chief Financial Officer
Herbert C. Sears         37      Chief Technology
Gordon S. Fowler         56      Director
J. Graham Simmonds       31      Director


         Mr. Halloran became the Chief Executive Officer, President and Director
of the Company on January 7, 2002. From March 2001 to November 2001, he was the
Chief Executive Officer of Sona Innovations Inc., a wireless software company.
From March 1989 to February 2001, Mr. Halloran was the Chief Executive Officer
and President of Relational Solutions Inc., a computer systems consulting from.
From August 1987 to March 1989, he was a Consulting Manager for Oracle
Corporation regarding database consulting. Mr. Halloran graduated from St. Clair
College in 1982 with a degree in business administration.

         Mr. Bulbrook is the CFO of the Company. Mr. Bulbrook has been a
partner of The Sedona Group since February, 2003. Prior to that Mr. Bulbrook
served as a Director of Finance and Innovation of Financial Models Company a
publicly traded company, from 1999 through 2003. From 1994 until 1999 Mr.
Bulbrook ran his own independent consulting practice. Mr. Bulbrook was with
Price Waterhouse as a member of the technology practice from 1990 through 1994
and with Clarkson Gordon (Ernst &Young) from 1984 until 1990 where he moved from
the accounting practice into providing corporate finance and restructuring
services to businesses, investors and lenders. Mr. Bulbrook earned an Honors BA
in Business Administration degree from The University of Western Ontario in
1984. Mr. Bulbrook is a C.A. (Chartered Accountant) and is a member of the
Canadian Institute of Chartered Accountants, (1987).

         Mr. Sears has been the Chief Technology Officer of the Company since
January 2002. From November 2000 to December 2001, he was Vice
President-Technology of Sona Innovations Inc., engaged in software development.
From May 1996 to October 2000, Mr. Sears was the Director of Technology of
ANGOSS Software Corp. and was engaged in software development. From June 1992 to
May 1996, he was a Senior Developer and programmer employed by CS Computing
Services Inc. Mr. Sears graduated from DeVry Institute of Technology in 1989
with a degree in computer science.

         Mr. Fowler became a director of the Company on March, 2002. From
February 2003 to March 2005, he was interim Chief Executive Officer and
President of Nano-C, Inc. in Westwood, MA, engaged in nano technology. From 1999
to the present, Mr. Fowler has been the principal of SynCom Associates in
Boston, MA. From 1998 to 1999, he was the Chief Executive Officer and President
of NetConvergence, Inc. From 1995 to 1998, he was the Chief Executive Officer
and President of MUSE Networks, Inc. an internet e-commerce company. From 1993
to 1995, Mr. Fowler was the Director of Operations of Cray Communications, Ltd.
Mr. Fowler graduated from the University of Saskatchewan in Canada in 1970 with
a Bachelor of Science degree in mechanical engineering.


                                       13
<PAGE>

         Mr. Simmonds became a director of the Company on July 7, 2004. From May
2004 to the present, he has been the Chief Executive Officer and President of
Diversified Racing Investments Inc. From January 2004 to May 2004, he was a Vice
President of Simmonds Mercantile Products Inc. From February 2003 to December
2003, he was employed by Prime Battery products Limited engaged in business
development. From April 2001 to February 2003, Mr. Simmonds was self employed as
a horse breeder and horse industry consultant. From January 2001 to April 2001,
he was a Vice President of IRMG, Inc. From May 1999 to January 2001, he was the
General Manager of TrackPower Inc. Mr. Simmonds attended McGill University.

ITEM 10.  EXECUTIVE COMPENSATION

         The officers and directors of the Company received compensation during
the three fiscal years ended December 31, 2004, as follows:

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                          ANNUAL COMPENSATION                            LONG TERM COMPENSATION
                                         ----------------------                         AWARDS           PAYOUTS
                                                                                    -------------------------------
                                                            OTHER      RESTRICTED    SECURITIES                 ALL
NAME AND                                                    ANNUAL       STOCK       UNDERLYING    LTIP        OTHER
PRINCIPAL               FISCAL       SALARY      BONUS   COMPENSATION    AWARDS       OPTIONS     PAYOUTS   COMPESATION
POSITION                 YEAR         ($)         ($)        ($)          ($)         SARS (#)      ($)         ($)
-----------------------------------------------------------------------------------------------------------------------
<S>                      <C>         <C>         <C>          <C>         <C>           <C>        <C>        <C>
Jeffrey T. Halloran      2004        $179,300    $ -0-        $ -0-       $ -0-        -0-         $ -0-      $-0-
Chief Executive          2003        $ 85,600    $ -0-        $ -0-       $ -0-        -0-         $ -0-      $-0-
Officer and President    2002        $ 85,600    $ -0-        $ -0-       $ -0-     3,300,000      $ -0-      $-0-
-----------------------------------------------------------------------------------------------------------------------

Vince Bulbrook           2004        $-0-        $ -0-        $29,050     $-0-      $-0-           $-0-       $-0-
FORMER Chief             2003        $-0-        $ -0-        $-0-        $-0-      $-0-           $-0-       $-0-
Executive Officer        2002        $-0-        $ -0-        $-0-        $-0-      $-0-           $-0-       $-0-

-----------------------------------------------------------------------------------------------------------------------

John G. Simmonds         2004        $-0-        $ -0-        $-0-        $-0-      $-0-           $-0-       $-0-
FORMER Chief             2003        $55,573     $ -0-        $-0-        $-0-      $-0-           $-0-       $-0-
Executive Officer        2002        $-0-        $ -0-        $-0-        $-0-      $-0-           $-0-       $-0-

-----------------------------------------------------------------------------------------------------------------------
</TABLE>

BOARD COMPENSATION

         The Company plans to provide its non-management directors, if any, a
competitive directors' compensation package comparable to programs offered by
similarly situated corporations.

BENEFIT PLANS

         The Company does not have any profit sharing plan or similar plans for
the benefit of its officers, directors or employees. However, the Company
reserves the right to establish any such plans in the future.

INCENTIVE STOCK PLAN

         Effective July 7, 2004, the Company adopted and approved its 2005
Incentive Stock Plan (the "Plan") which reserves 20,000,000 shares of Common
Stock for issuance under the Plan. The Plan allows us to issue awards of
incentive or non-qualified stock options, stock appreciation rights, and stock


                                       14
<PAGE>

bonuses which may be subject to restrictions. The Company issued stock options
to replace 2,000,000 Phantom Fiber Corporation stock options granted in February
2002.  Each stock option will allow the holder to purchase 5.5 post-merger
common shares (11,000,000 common shares in aggregate) for an exercise price
equal to the exercise price of the Phantom Fiber Corporation stock options
previously held divided by 5.5, and with an expiry date and vesting provisions
similar to those of the previously outstanding stock options..

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who beneficially own
more than ten percent (10%) of its equity securities, to file reports of
ownership and changes in ownership with the U.S. Securities and Exchange
Commission. Officers, directors and greater than ten percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

         Based on its review of the copies of such forms received by it, the
Company believes that during the year ended December 31, 2004, all such filing
requirements applicable to its officers, directors and 10% owners of its Common
Stock were complied with.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

         The Company is a Delaware corporation. Title 8, Chapter 1, Section 145
of the Delaware Corporation Law provides authority for broad indemnification of
officers, directors, employees and agents of a corporation, with certain
specified exceptions.

         Article VIII of the By-Laws of the Company provides that the Company
shall have the power to pay or reimburse any present or former director or
officer of the Company any costs or expenses actually and necessarily incurred
by that officer in any action, suit, or proceeding to which the officer is made
a party by reason of holding that position, provided, however, that no officer
shall receive such indemnification if finally adjudicated therein to be liable
for negligence or misconduct in office. This indemnification shall extend to
good-faith expenditures incurred in anticipation of threatened or proposed
litigation. The Board of directors may in proper cases, extend the
indemnification to cover the good-faith settlement of any such action, suit or
proceeding, whether formally instituted or not.

         At the present time, the Company does not have any officer-director
liability insurance although permitted by Delaware law, nor does the Company
have indemnification agreements with any of its directors, officers, employees
or agent.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
           AND RELATED STOCKHOLDER MATTERS.

         The following table sets forth certain information concerning the
beneficial ownership of the Company's shares of Common Stock by directors and
officers of the Company, and by each person known to the Company to be a
beneficial owner of five percent (5%) or more of its outstanding Common Stock as
of December 31, 2004.


                                       15
<PAGE>

                                                               Percentage of
       Name and Address             Number of Shares        Outstanding Shares
       ----------------             ----------------        ------------------
Jeffrey T. Halloran
6 Bunhill Court
Ajax, Ontario, Canada L154S7            87,241,000(1)(2)          32.6%

Lorraine Halloran
144 Front Street West
Suite 580
Toronto, Ontario, Canada
M5J 2L7                                                            6.2%
                                        16,500,000(1)

Herbert C. Sears
144 Front Street West
Suite 580
Toronto, Ontario, Canada
M5J 2L7                                  2,365,000(3)              .88%

Gordon S. Fowler
95 Lake Road Terrace
Wayland, MA 01778                          385,000(4)              .14%

J. Graham Simmonds
330 University Avenue
Toronto, Ontario, Canada
M5G 1R7                                         -0-                  0%

OFFICERS AND DIRECTORS AND             106,491,000                39.8%
RELATED OWNERS AS A
GROUP (ABOVE 5 PERSONS)


(1)   They have sole voting and dispositive power with respect to their shares
      of Common Stock of the Company

(2)   Includes 83,116,000 shares held by the Halloran Family Trust and stock
      options to purchase 4,125,000 shares of Common Stock, being comprised of
      3,300,000 options to Mr. Halloran and 825,000 options to Bernadette
      Halloran, at an exercise price of $0.0114 per share.

(3)   Represents a stock option to purchase 2,365,000 shares of Common Stock of
      the Company at an exercise price of $.0114 per share.

(4)   Represents a stock option to purchase 385,000 shares of Common Stock at an
      exercise price of $.0114 per share.


                                       16
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Loans From Related Parties

i) On November 12, 2002, Mr. Brian Usher-Jones, a stockholder and director of
the Company, provided a $77,131 (CAD$100,000) loan by way of a note payable.
Under the terms of the loan agreement Mr. Usher-Jones would receive:

      (a)   a fee of 5% of the amount borrowed;

      (b)   2% of the outstanding balance paid as interest on a monthly basis;

      (c)   warrants to purchase 1,000,000 shares of the Company's common stock
            for each 30 day period or part thereof that the borrowed funds are
            outstanding; and

      (d)   a further 5% fee if the loan is not repaid in 90 days.

ii) Also on November 12, 2002, Mr. Neil Greenberg, the sole shareholder of
1500450 Ontario Limited which was deemed beneficially to own approximately 20.5%
of the Company's outstanding Common Shares, provided a $77,131 (CAD$100,000)
loan to the Company on the same terms as Mr. Usher-Jones.

iii) On December 29, 2003, the Company entered into a settlement agreement with
Mr. Brian Usher-Jones pursuant to which the Company agreed to pay $101,041
(CAD$131,000) in cash on January 2, 2004 as full and complete repayment of the
loan. As part of the settlement Mr. Usher-Jones agreed to forgive all fees and
warrants issuable under the terms of the loan. On January 23, 2004, the Company
entered into a Settlement Agreement with Mr. Neil Greenberg. Under the terms of
the settlement, the Company transferred 50,000 shares of Wireless Age
Communications, Inc. common stock to Mr. Greenberg in payment of the loan. As
part of the settlement, Mr. Greenberg agreed to forgive all interest and
warrants issuable under the original loan agreement and the Company also agreed
to adjust the number of Wireless Age Communications, Inc. common shares as
follows: In the event that the closing price is less than $3.00 per share of
Wireless Age common stock on the earlier of (i) the date such stock becomes
freely tradable under Rule 144, or (ii) the date such stock becomes freely
tradable under an effective registration statement filed by Wireless Age, then
the Company shall issue to Mr. Greenberg an additional number of shares of
Wireless Age common stock equal to the excess of (x) US$150,000 divided by the
average per share closing price of Wireless Age common stock for the 5 trading
days immediately prior to such date, over (y) 50,000.

iv) On January 23, 2004, the Company transferred 50,000 Wireless Age
Communications, Common Shares (marketable securities) to Neil Greenberg and
1500450 Ontario Inc., a related party (related by virtue of their ownership
position in the Company), in repayment of promissory notes of $162,000. The
Company also agreed to adjust the number of shares in the event that the closing
share prices is less than $3.00 on the earlier of: (1) the date which the shares
become freely trading under securities legislation, or (2) the date the shares
are freely tradable under a registration statement.

On February 18, 2005, the Company negotiated a final settlement of this matter
under which it agreed to issue 500,000 shares of its capital stock at a deemed
value of $30,000 and transferred 75,000 shares of common stock of Wireless Age
Communications Inc. at a deemed value of $53,250. This aggregate amount of
$83,250 has been accrued as a settlement of loan obligation in the statement of
operations at December 31, 2004.

v) Officers, and certain persons related to officers have provided $35,903 in a
prior period to fund operations of the Company. This loan is included in short
term borrowings. It is unsecured, non-interest bearing and has no formal
repayment terms.


                                       17
<PAGE>

Phantom Fiber Acquisition

Pursuant to the terms of the share exchange agreement between the Company and
Phantom Fiber, upon Closing on July 7, 2004, the holders of an aggregate of
CAD1,200,000 (approximately $919,750) principal amount of convertible debentures
of Phantom Fiber Corporation received an aggregate of 30,000,000 shares of the
Company's common stock and warrants exercisable until the second anniversary of
the Closing to purchase 15,000,000 shares of the Company's common stock at an
exercise price of $0.084 per share. The Company's former directors, Brian
Usher-Jones and John G. Simmonds, each held CAD$100,000, and the Company's
former Secretary, Carrie Weiler, held CAD$25,000, principal amount of such
Phantom Fiber debentures. Accordingly, upon the Closing, Mr. Usher-Jones, Mr.
Simmonds and Ms. Weiler received 2,500,000, 2,500,000 and 625,000 shares of the
Company's common stock and 1,250,000, 1,250,000 and 312,500 warrants,
respectively.

Private Sales Transaction

On January 13, 2005, the Company entered into a private sales transaction with a
former officer, director and shareholder of Pivotal Self-Service Technologies
Inc., Mr. John G. Simmonds, under which the Company agreed to deliver 800,000
shares of common stock of Wireless Age Communications Inc. for cash
consideration of $600,000 and 3,000,000 shares of common stock of Trackpower
Inc. for cash consideration of $150,000. The transaction, as amended March 30,
2005, provides for periodic delivery of these shares in quantities proportionate
to cash payments received as a percentage of the total proceeds of the
transaction. As at March 31, 2005, the Company has received $324,200 under this
transaction and has delivered 345,813 shares of common stock of Wireless Age
Communications Inc. and 1,296,800 shares of common stock of Trackpower Inc.


ITEM 13.  EXHIBITS

         (3)(i)          Certificate of Incorporation of the Company, filed as
                         Appendix B to Exhibit 99.1 to the Company's
                         Registration Statement on Form 10-SB, No. 1-15627
                         filed on February 17, 2000, is incorporated hereby by
                         reference.

         (3)(ii)         Certificate of Amendment to Articles of Incorporation
                         of the Company is incorporated hereby reference to
                         the Form 8-K current report of the Company filed
                         January 19, 2002.
         (3)(iii)        By-Laws of the Company (formerly called Eieihome.com,
                         Inc.), filed Appendix C to Exhibit 99.1 to the
                         Company's Registration Statement on Form 10-SB, No.
                         1-15627 filed on February 17, 2000, is incorporated
                         herein by reference.
         Exhibit 10.1    Share exchange agreement dated April 21, 2004
                         between Phantom Fiber Corporation and Pivotal
                         Self-Service Technologies Inc. is incorporated herein
                         by reference to Exhibit 2.1 to the Form 8-K current
                         report of the Company filed on July 22, 2004.
         Exhibit 10.2    Asset Purchase Agreement dated September 15,
                         2004 by and between Phantom Fiber Corporation and
                         Wireless Age Communications is incorporated herein by
                         reference to Exhibit 2.1 to the Form 8-K current
                         report of the Company filed on July 22, 2004.
         Exhibit 10.3    2005 Stock Option, SAR and Stock Option Plan is
                         incorporated herein by reference to Exhibit 10.1 to
                         the Form S-8 registration statement (Reg. No.
                         333-122730), filed on February 11, 2005.
         Exhibit 21      Subsidiaries
         Exhibit 31.1    Certification of Jeffrey T. Halloran
         Exhibit 31.2    Certification of Vince Bulbrook
         Exhibit 32.2    Certification of Jeffrey T. Halloran and Vince Bulbrook


                                       18
<PAGE>

Reports on Form 8-K.

          None

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

          Fees paid to principal accountants are as follows:

<TABLE>
<CAPTION>
Name                               Audit Fees    Audit Related Fees   Tax Fees    All other fees

<S>                                 <C>               <C>              <C>         <C>
Mintz & Partners LLP for fiscal
year ended                                            $ 17,000         $ 5,600     $    14,500
                                                      --------         -------     -----------
December 31, 2003                   $ 35,400           $ nil            $ nil      $    13,700
                                    --------           ------           ------     -----------
December 31, 2004                   $ 31,500
                                    --------
</TABLE>

         As of December 31, 12004, the Company had not established an audit
committee of the Board of Directors, and the entire Board of Directors performed
the duties of an audit committee. The Board of Directors evaluated the scope and
cost of the audit for its fiscal year ended December 31, 2004 before its auditor
rendered its audit and non-audit services.



                                       19
<PAGE>



================================================================================



        CONSOLIDATED FINANCIAL STATEMENTS



        PHANTOM FIBER CORPORATION
        (FORMERLY PIVOTAL SELF-SERVICE TECHNOLOGIES INC.)



        FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003





        INDEX

        INDEPENDENT AUDITORS' REPORT                                         F-1

        CONSOLIDATED BALANCE SHEET                                           F-2

        CONSOLIDATED STATEMENTS OF OPERATIONS                                F-3

        CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIENCY       F-4

        CONSOLIDATED STATEMENTS OF CASH FLOWS                                F-5

        NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       F-6



<PAGE>

REPORT OF INDEPENDENT REGISTERED AUDITORS


TO THE STOCKHOLDERS OF
PHANTOM FIBER CORPORATION


We have audited the  accompanying  consolidated  balance  sheet of Phantom Fiber
Corporation, as at December 31, 2004, and the related consolidated statements of
operations,  changes in  stockholders'  deficiency  and cash flows for the years
ended December 31, 2004 and 2003. These  consolidated  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position of Phantom  Fiber
Corporation at December 31, 2004, and the results of its operations and its cash
flows  for the  years  ended  December  31,  2004  and 2003 in  conformity  with
accounting principles generally accepted in the United States of America.

As described in the notes, the accompanying  consolidated  financial  statements
have been  prepared  assuming the Company will continue as a going  concern.  At
December  31, 2004 the Company had an  accumulated  deficit of  $2,496,674.  The
continued  operating losses raise  substantial doubt about the Company's ability
to continue as a going concern.  The  consolidated  financial  statements do not
include any adjustments that might result from the going concern  assumption not
being applicable.


"Mintz & Partners LLP"
Chartered Accountants
Toronto, Ontario
March 30, 2005


                                      F-1
<PAGE>

PHANTOM FIBER CORPORATION

Consolidated Balance Sheet
As at December 31, 2004
================================================================================

<TABLE>
<CAPTION>
ASSETS

<S>                                                                               <C>
CURRENT ASSETS:
     Cash                                                                         $    19,400
     Accounts receivable                                                               41,244
     Marketable securities (note 3)                                                   962,599
     Investment tax credit receivable                                                 353,340
     Prepaid expenses                                                                  14,414
                                                                                  -----------

TOTAL CURRENT ASSETS                                                                1,390,997

PROPERTY, PLANT AND EQUIPMENT (note 4)                                                 53,127
                                                                                  -----------

TOTAL ASSETS                                                                      $ 1,444,124
                                                                                  ===========

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

CURRENT LIABILITIES:
     Accounts payable                                                             $ 1,077,179
     Short term borrowings (note 5)                                                   340,920
     Current portion of obligation under capital leases (note 4)                       26,274
     Notes payable (note 6)                                                           109,725
Senior subordinated convertible debentures (note 7)                                    66,500
                                                                                  -----------

TOTAL CURRENT LIABILITIES                                                           1,620,598
                                                                                  -----------

Obligation Under Capital Leases (note 4)                                               24,649
                                                                                  -----------

                                                                                    1,645,247

STOCKHOLDERS' DEFICIENCY (note 8)

PREFERRED STOCK, $100 par value, 8%, non-voting, convertible, redeemable,
     2,000 shares authorized, No shares issued and outstanding
COMMON STOCK, $.001 par value, 400,000,000 shares authorized,
     260,689,071 shares, issued and outstanding at December 31, 2004                  260,689
ADDITIONAL PAID-IN CAPITAL                                                          2,532,909
                                                                                  -----------

                                                                                    2,793,598

ACCUMULATED DEFICIT                                                                (2,496,674)

ACCUMULATED OTHER COMPREHENSIVE LOSS                                                 (498,047)
                                                                                  -----------

TOTAL STOCKHOLDERS' DEFICIENCY                                                       (201,123)
                                                                                  -----------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                    $ 1,444,124
                                                                                  ===========
</TABLE>

                                      F-2
<PAGE>

PHANTOM FIBER CORPORATION

Consolidated Statements of Operations
For the Years Ended December 31, 2004 and 2003
================================================================================

<TABLE>
<CAPTION>
                                                                2004                     2003
--------------------------------------------------------------------------------------------------

<S>                                                       <C>                      <C>
REVENUE
     Consulting services                                  $        91,511          $        46,882
     Interest and other income                                      6,906                    4,955
                                                          ----------------------------------------

                                                                   98,417                   51,837
                                                          ----------------------------------------

OPERATING EXPENSES:
     Research and development                                     572,258                  (96,550)
     Sales and marketing                                          325,101                  149,162
     Interest expense                                              75,555                    6,182
     General and administrative                                   946,202                  266,786
                                                          ----------------------------------------

Total operating expenses                                        1,919,116                  325,580
                                                          ----------------------------------------

OPERATING LOSS BEFORE OTHER INCOME (EXPENSES)                  (1,820,699)                (273,743)

OTHER INCOME (EXPENSES)
     Loss on disposal of marketable securities                   (109,534)                       -
     Gain on disposal of Battery Business                         391,874                        -
     Earnout on Battery Business                                   35,500                        -
     Settlement of loan obligation (note 12 (c))                  (83,250)                       -
     Gain (loss) on foreign exchange                               62,060                        -
                                                          ----------------------------------------

NET LOSS                                                  $    (1,524,049)         $      (273,743)
                                                          ========================================

EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
     Weighted average number of common shares
         outstanding (note 2 i))                              197,365,773               131,247,999
      Loss per share                                       $       (0.008)           $       (0.002)
</TABLE>

                                      F-3
<PAGE>

Consolidated Statements of Changes in Stockholders' Equity (Deficiency)
For the Years Ended December 31, 2004 and 2003

<TABLE>
<CAPTION>
------------------------------------ ------------------- ------------------- ------------------- -------------------
                                        Common stock        Common stock      Additional paid          Other
                                           Number            Par Value           in capital        Shareholders'
                                                                                                       Equity

------------------------------------ ------------------- ------------------- ------------------- -------------------
                                            (#)                 ($)                 ($)                 ($)
------------------------------------ ------------------- ------------------- ------------------- -------------------
<S>                                         <C>                     <C>              <C>                    <C>
Balance, December 31, 2002                  119,405,000             119,405                                 490,293
------------------------------------ ------------------- ------------------- ------------------- -------------------
Issuance of Series A stock                   18,005,735              18,006                                 163,043
------------------------------------ ------------------- ------------------- ------------------- -------------------
Issuance of convertible debentures            9,593,476               9,593                                 284,527
------------------------------------ ------------------- ------------------- ------------------- -------------------
Net loss for the year ended
December 31, 2003
------------------------------------ ------------------- ------------------- ------------------- -------------------
Adjustment arising from foreign
exchange translation loss
------------------------------------ ------------------- ------------------- ------------------- -------------------
Balance, December 31, 2003                  147,004,211             147,004                                 937,863
------------------------------------ ------------------- ------------------- ------------------- -------------------
Issuance of convertible debentures           20,406,524              20,407             605,223
------------------------------------ ------------------- ------------------- ------------------- -------------------
Adjustment arising from
reorganization due to reverse
acquisition                                  93,278,336              93,278           1,927,685           (937,863)
------------------------------------ ------------------- ------------------- ------------------- -------------------
Net loss for the year ended
December 31, 2004
------------------------------------ ------------------- ------------------- ------------------- -------------------
Adjustment arising from unrealized
loss on marketable securities
------------------------------------ ------------------- ------------------- ------------------- -------------------
Adjustment arising from foreign
exchange translation loss
------------------------------------ ------------------- ------------------- ------------------- -------------------
Balance, December 31, 2004                  260,689,071             260,689           2,532,909                   -
------------------------------------ ------------------- ------------------- ------------------- -------------------
</TABLE>

<TABLE>
<CAPTION>
------------------------------------ ------------------- ------------------- -------------------
                                        Accumulated      Accumulated other         Total
                                          Deficit          comprehensive        Stockholders
                                                            income (loss)          Equity
                                                                               /(Deficiency)
------------------------------------ ------------------- ------------------- -------------------
                                            ($)                 ($)                 ($)
------------------------------------ ------------------- ------------------- -------------------
<S>                                           <C>                    <C>                <C>
Balance, December 31, 2002                    (698,882)              84,431             (4,753)
------------------------------------ ------------------- ------------------- -------------------
Issuance of Series A stock                                                              181,049
------------------------------------ ------------------- ------------------- -------------------
Issuance of convertible debentures                                                      294,120
------------------------------------ ------------------- ------------------- -------------------
Net loss for the year ended
December 31, 2003                             (273,743)                               (273,743)
------------------------------------ ------------------- ------------------- -------------------
Adjustment arising from foreign
exchange translation loss                                          (29,251)            (29,251)
------------------------------------ ------------------- ------------------- -------------------
Balance, December 31, 2003                    (972,625)              55,180             167,422
------------------------------------ ------------------- ------------------- -------------------
Issuance of convertible debentures                                                      625,630
------------------------------------ ------------------- ------------------- -------------------
Adjustment arising from
reorganization due to reverse
acquisition                                                                           1,083,101
------------------------------------ ------------------- ------------------- -------------------
Net loss for the year ended
December 31, 2004                           (1,524,049)                             (1,524,049)
------------------------------------ ------------------- ------------------- -------------------
Adjustment arising from unrealized
loss on marketable securities                                     (535,378)           (535,378)
------------------------------------ ------------------- ------------------- -------------------
Adjustment arising from foreign
exchange translation loss                                          (17,849)            (17,849)
------------------------------------ ------------------- ------------------- -------------------
Balance, December 31, 2004                  (2,496,674)           (498,047)           (201,123)
------------------------------------ ------------------- ------------------- -------------------
</TABLE>

                                      F-4
<PAGE>

Consolidated Statements of Cash Flows
For the Years Ended December 31, 2004 and 2003
================================================================================

<TABLE>
<CAPTION>
                                                                    2004                     2003
-------------------------------------------------------------------------------------------------------

<S>                                                            <C>                      <C>
OPERATING ACTIVITIES
     Cash received from customers and governments              $       468,409          $       197,816
     Cash paid to suppliers and employees                           (1,271,364)                (792,103)
     Interest received                                                   6,906                    4,957
     Interest paid                                                     (97,617)                  (6,182)
     Foreign exchange gain (loss)                                       44,211                  (29,251)
                                                               ----------------------------------------
                                                                      (849,455)                (624,763)
                                                               ----------------------------------------
FINANCING ACTIVITIES
     Series A preference shares                                              -                  181,049
     Convertible debenture                                             625,630                  294,120
     Obligation under capital leases                                    32,954                   17,969
     Note payable                                                     (173,000)                       -
     Increase in short term borrowings                                 203,784                  114,973
                                                               ----------------------------------------
                                                                       689,368                  608,111
                                                               ----------------------------------------
INVESTING ACTIVITIES
     Purchase of property, plant and equipment                         (45,785)                 (25,886)
     Cash received from reverse acquisition                              5,541                        -
     Proceeds from the sale of marketable securities                   199,989                        -
                                                               ----------------------------------------
                                                                       159,745                  (25,886)
                                                               ----------------------------------------

DECREASE IN CASH AND CASH EQUIVALENTS                                     (342)                 (42,538)
CASH, BEGINNING OF YEAR                                                 19,742                   62,280
                                                               ----------------------------------------

CASH, END OF YEAR                                              $        19,400          $        19,742
                                                               ========================================
NON CASH FINANCING ACTIVITIES:

     Assets and liabilities acquired pursuant to reverse
     acquisition:
         Marketable securities                                 $       930,000                        -
         Battery business                                              315,126                        -
         Prepaid expenses                                              324,100                        -
         Accounts payable and accrued liabilities                     (277,441)                       -
         Notes payable                                                (147,725)                       -
         Senior subordinated convertible debentures                    (66,500)                       -
     Marketable securities received for settlement of
         Note receivable                                               135,000                        -
         Earnout on sale of Battery Business (note 1(c), 3)             35,500                        -
</TABLE>


                                      F-5
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================

1.    DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

a)       Description of Business

          The business of Phantom Fiber  Corporation  (the "Company")  (formerly
          known as Pivotal Self Service Technologies Inc, Wireless Ventures Inc.
          and  Hycomp,  Inc.) is  conducted  through its  wholly-owned  Canadian
          subsidiary Phantom Fiber Inc. headquartered in Toronto, Canada.

          It is  engaged  in the  business  of the  sale  and  licensing  of its
          proprietary  wireless  software  platform  and  integration  services.
          Phantom Fiber uses its software platform to extend the rich multimedia
          content and user  experience of its customers'  existing  Internet web
          sites  securely  and  instantly  to the PDAs and cell phones of mobile
          users.

          Phantom  Fiber  derives  its  revenue  from  direct  sales of  various
          licensing  and revenue  sharing  plans that allow its revenues to grow
          based upon the adoption rate of its customer's end users.

b)       Reverse Acquisition Transaction

          On July 7, 2004, the Company (formerly known as "Pivotal  Self-Service
          Technologies  Inc.") completed a reverse acquisition of privately held
          Phantom  Fiber  Corporation,  an Ontario  corporation.  The merger was
          effected  pursuant to a Share Exchange  Agreement dated April 22, 2004
          (the  "  Agreement")  by and  among  the  Company  and  Phantom  Fiber
          Corporation.  In  accordance  with  the  terms of the  Agreement,  the
          Company merged with and into Phantom Fiber  Corporation,  with Phantom
          Fiber Corporation  remaining as the surviving corporation and a wholly
          owned subsidiary of the Company.

          Pursuant to the Agreement,  the outstanding  shares of common stock of
          Phantom Fiber Corporation,  converted into an aggregate of 167,410,735
          shares of the Company's common stock,  which represented 64 percent of
          the  Company's  outstanding  voting stock after  giving  effect to the
          merger. The transaction is recorded as a reverse acquisition since the
          Phantom  Fiber   Corporation   stockholders   became  the  controlling
          stockholders of the Company. Accordingly, the transaction is accounted
          for as the issuance of stock by Phantom Fiber  Corporation for the net
          monetary assets of the Company  accompanied by a  recapitalization  of
          Phantom Fiber Corporation and no goodwill or any intangible assets are
          recorded.  Prior period results and  comparatives are those of Phantom
          Fiber  Corporation  and its  subsidiary.  Based  on the  price  of the
          Company's  common  stock  on July 7,  2004 of  $0.08  per  share,  the
          purchase  price  approximated  $13,393,000.  In  connection  with  the
          merger,  the  Company  changed  its name  from  "Pivotal  Self-Service
          Technologies Inc." to "Phantom Fiber Corporation".

          Pursuant  to the terms of the share  exchange  agreement  between  the
          Company and Phantom  Fiber,  upon Closing on July 7, 2004, the holders
          of an aggregate of CAD1, 200,000  (approximately  $919,750)  principal
          amount of convertible debentures of Phantom Fiber Corporation received
          warrants  exercisable  until the second  anniversary of the Closing to
          purchase  15,000,000  shares  of  the  Company's  common  stock  at an
          exercise price of $0.084 per share (see Note 8 (c))..

          The Company also issued  stock  options to replace  2,000,000  Phantom
          Fiber  Corporation  stock options  existing prior to the merger.  Each
          stock option will allow the holder to purchase 5.5 post-merger  common
          shares  (11,000,000  common shares in aggregate) for an exercise price
          equal to the exercise  price of the Phantom  Fiber  Corporation  stock
          options  previously  held  divided by 5.5, and with an expiry date and
          vesting  provisions  similar  to those of the  previously  outstanding
          stock options.


                                       F-6
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION (continued)

          Certain  contingent  adjustments  exist  with  respect  to  the  share
          exchange and valuation described above (see note 11 (b).

     c)   Disposition of Prime Battery

          The  Company  disposed  of the all of the shares of its Prime  Battery
          Products Limited ("Prime  Battery")  subsidiary plus additional assets
          and liabilities  (together,  the "Battery  Business") in a transaction
          that was signed and consummated on September 15, 2004.

          The Battery  Business  was sold to Wireless  Age  Communications  Inc.
          ("Wireless  Age")  for  the  following   consideration:   (i)  700,000
          restricted common shares of Wireless Age; and (ii) 200,000  additional
          restricted  common  shares  ("Earnout  Shares") of Wireless  Age as an
          earnout  over a one year  period.  The Earnout  Shares are issuable on
          November 30, 2004 (see Note 3),  February  28, 2005,  May 31, 2005 and
          August 31, 2005 if Prime  Battery  continues to earn  royalties  under
          existing  agreements with Simmtronics  Limited and SureCells  Portable
          Power Ltd.

     d)   Going Concern and Basis of Presentation

          These  financial  statements  have been  prepared on the going concern
          basis,  which assumes the  realization  of assets and  liquidation  of
          liabilities  in the normal  course of  business,  notwithstanding  the
          significant  operating losses for the year ended December 31, 2004 and
          the deficit as at  December  31,  2004.  The ability of the Company to
          continue as a going concern is dependent on the  Company's  ability to
          generate future  profitable  operations and receive  continued support
          from its lenders,  shareholders and raise external financing for which
          there can be no assurance  regarding the success thereof. As mentioned
          in note 12 (a),  the  Company  intends to obtain cash from the sale of
          its available-for-sale securities.

     e)  Comparative figures:

         Certain  comparative figures have been reclassified to conform with the
         financial statement presentation adopted in the current year.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a)   Use of estimates

          The  preparation of  consolidated  financial  statements in conformity
          with generally accepted  accounting  principles requires management to
          make  estimates and  assumptions  that affect the reported  amounts of
          assets  and  liabilities  and  disclosures  of  contingent  assets and
          liabilities  at the date of the financial  statements and the reported
          amounts of revenue and expenses during the period.  Actual results may
          differ from these estimates.

     b)   Allowance for Doubtful Accounts

          The  Company  records an  allowance  for  doubtful  accounts  based on
          specifically   identified  amounts  that  management  believes  to  be
          uncollectible.  The criteria for allowance  provision  are  determined
          based on historical  experience  and the  Company's  assessment of the
          general  financial  conditions  affecting  its customer  base.  If the
          Company's  actual  collections  experience  changes,  revisions to the
          allowance may be required.


                                      F-7
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     c)   Acquisitions and business combinations

          The Company accounts for acquisitions and business  combinations under
          the purchase method of accounting. The Company includes the results of
          operations of the acquired  business from the  acquisition  date.  Net
          assets of the  companies  acquired are recorded at their fair value at
          the  acquisition  date. The excess of the purchase price over the fair
          value of net assets acquired are included in intangible  assets in the
          accompanying consolidated balance sheets.

     d)   Revenue recognition

          The Company's revenue consists of software  licensing fees and related
          service revenues which are recognized when the product is delivered or
          the service has been  rendered and when the rights of ownership of the
          product are  transferred to the purchaser and collection is reasonably
          assured.

     e)   Intangibles and goodwill

          The Company regularly reviews all of its long-lived assets,  including
          goodwill and other intangible assets,  for impairment  whenever events
          or changes in  circumstances  indicate that the carrying value may not
          be  recoverable.  Factors the Company  considers  important that could
          trigger  an  impairment  review  include,  but  are  not  limited  to,
          significant  underperformance  relative  to  historical  or  projected
          future operating results,  significant changes in the manner of use of
          the  acquired  assets  or  the  strategy  for  the  Company's  overall
          business,  and significant  negative industry or economic trends. When
          management  determines  that an impairment  review is necessary  based
          upon  the  existence  of  one  or  more  of the  above  indicators  of
          impairment,  the Company  measures any impairment based on a projected
          discounted  cash flow method using a discount rate  commensurate  with
          the risk inherent in our current business model.

          Significant  judgment is required in the development of projected cash
          flows  for  these  purposes   including   assumptions   regarding  the
          appropriate  level  of  aggregation  of cash  flows,  their  term  and
          discount rate as well as the underlying  forecasts of expected  future
          revenue and expense.  To the extent that events or circumstances cause
          assumptions  to  change,  charges  may  be  required  which  could  be
          material.

     f)   Investments

          The Company's  investment  in  marketable  securities is classified as
          available  for sale  securities  and is  recorded at their fair value.
          Unrealized  holding gains and losses are reported as a net amount in a
          separate component of shareholders' equity until realized.

     g)   Income taxes

          The Company  accounts for income taxes in accordance with Statement of
          Financial Accounting Standards ("SFAS") No. 109, Accounting for Income
          Taxes.  Under SFAS No. 109,  deferred tax assets and  liabilities  are
          determined  based  on  temporary  differences  between  the  financial
          statement


                                      F-8
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

          and tax bases of assets and  liabilities  and net  operating  loss and
          credit carryforwards using enacted tax rates in effect for the year in
          which the  differences are expected to reverse.  Valuation  allowances
          are  established  when necessary to reduce  deferred tax assets to the
          amounts expected to be realized. A provision for income tax expense is
          recognized for income taxes payable for the current  period,  plus the
          net changes in deferred tax amounts.

     h)   Financial instruments

          The fair values of the financial  assets and liabilities are indicated
          by their  carrying  value.  The fair  value  of  non-interest  bearing
          advances and notes payable  approximate  their  carrying value because
          they are due on demand,  have no terms of payment  and are  treated as
          payable on demand.

     i)   Net loss per share

          For both 2004 and 2003, net loss per share has been computed using the
          net loss for the year divided by the weighted average number of shares
          outstanding. Diluted loss per share is not presented as the effects of
          convertible debentures, warrants and options are anti-dilutive.

     j)   Foreign currency

          The  functional  currency  of the  company is the U.S.  dollar and the
          functional  currency of the wholly owned subsidiary  located in Canada
          is the Canadian dollar.  Assets and liabilities of this subsidiary are
          translated  to U.S.  dollars  at  year-end  exchange  rates and income
          statement  items are  translated at the exchange  rates present at the
          time such transactions arise.  Resulting translation  adjustments,  if
          material,  are recorded as a separate  component of accumulated  other
          comprehensive    income,   a   component   of   stockholders'   equity
          (deficiency).

     k)   Investment tax credits

          The Company's subsidiary is entitled to Canadian tax credits which are
          earned  as  a  percentage   of  eligible   research  and   development
          expenditures  incurred in each taxation  year.  Investment tax credits
          earned  relating to research and  development  expenses and  property,
          plant and equipment  purchases are accounted for as a reduction of the
          respective expenses and the cost of such assets.

     l)   Comprehensive income

          Comprehensive  Income  includes the net exchange  differences  arising
          from the translation of Canadian dollar denominated  subsidiaries into
          US dollars and accumulated  unrealized holding gains and losses on the
          Company's available for sale securities.

     m)   Recent accounting pronouncements

          In December 2004, the Financial  Accounting  Standards  Board {"FASB")
          issued Statement No. 123(R),  Share-Based Payments, which will require
          compensation costs related to share-based  payment  transactions to be
          recognized   in  the  financial   statements.   As  permitted  by  the
          predecessor   Statement   No.123,   the  Company  does  not  recognize
          compensation  expense with respect to stock options issued because the
          option  price was no  greater  than the  market  price at the time the
          option was issued.  Statement  123(R) will be  effective in the fiscal
          quarter beginning January 1, 2006. The


                                       F-9
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================

          Company  has not  completed  an  evaluation  of the impact of adopting
          Statement 123(R).

          In  December  2004,  the  FASB  issued  SFAS  No.  153  "Exchanges  of
          Nonmonetary  Assets-amendment  of APB Opinion No. 29".  Statement  153
          eliminates  the  exception  to fair  value for  exchanges  of  similar
          productive  assets  and  replaces  it  with a  general  exception  for
          exchange transactions that do not have commercial  substance,  defined
          as transactions that are not expected to result in significant changes
          in the cash flows of the reporting entity. This statement is effective
          for exchanges of nonmonetary assets occurring after June 15, 2005. The
          Company  will adopt this  Statement in fiscal 2005 and adoption is not
          expected  to  have  a  material  impact  on  the  Company's  financial
          position, results of operations, or cash flows.

          In November  2004,  the FASB  ratified the Emerging  Issues Task Force
          ("EITF")  consensus  on  Issue  03-13,  "Applying  the  Conditions  in
          Paragraph 42 of FASB Statement No, 144, "Accounting for the Impairment
          or Disposal of Long-Lived  Assets, " in Determining  whether to Report
          Discontinued Operations, which is effective for us at the beginning of
          2005.  The  Company  will  adopt  this  Statement  in fiscal  2005 and
          adoption is not  expected to have a material  impact on the  Company's
          financial position, results of operations, or cash flows.

     m)   Recent accounting pronouncements (continued)

          In November 2004, the FASB issued Statement No. 151,  Inventory Costs,
          an amendment of ARB No.43, Chapter 4, to clarify that abnormal amounts
          of idle facility expense,  freight, handling costs and wasted material
          (spoilage)  should be recognized as current period  charges,  and that
          fixed  production  overheads should be allocated to inventory based on
          normal  capacity  of  production   facilities  Statement  No.  151  is
          effective for fiscal years beginning after June 15, 2005. The adoption
          of SFAS 151 is not expected to have a material impact on the Company's
          financial position, results of operations, or cash flows.

     n)   Stock Options

          The  Company  applies  the  disclosure   provisions  of  SFAS  No.123,
          "Accounting  for  Stock-Based   Compensation."   Stock  option  awards
          continue to be accounted for in accordance  with APB Opinion No.25. As
          the number of shares to be issued and the per share  strike  price are
          not subject to  uncertainty,  stock option  grants are accorded  fixed
          accounting  treatment.  As a  result,  the  Company  does  not  record
          compensation  expense in  connection  with the granting of these stock
          options.

          Had compensation cost for the employee and non-employee director stock
          options been determined  based on the fair value at the grant date for
          awards in 2004 and 2003 consistent with the provisions of SFAS No.123,
          net  earnings  would  have  been  reduced  to the  pro  forma  amounts
          indicated below (amounts in thousands)

                                                  2004                 2003
                                            ----------------------------------

         Net loss as reported               $     (1,524)         $       (274)
         Pro forma compensation expense               21                    19
                                            ----------------------------------

         Pro forma net loss                 $     (1,545)         $       (293)
                                            ==================================

         There is no effect on loss per share.


                                       F-10
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

        The fair value of each option  grant is  estimated  on the date of grant
        using the  Black-Scholes  option-pricing  model. The following  weighted
        average assumptions were used in the model:

                                                 2004                   2003
                                              ---------------------------------
         Dividend yield                          nil                     nil
         Expected volatility                      90%                     90%
         Risk free interest rates                 3.5%                    2.6%
         Expected lives (years)                   3.0                     3.0



                                      F-11
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

     o)   Property, Plant and Equipment

          Property,  plant and  equipment  are carried at cost less  accumulated
          amortization.  Amortization is calculated using the  declining-balance
          method as follows.

                     Computer hardware                        30%
                     Office furniture and equipment           20%

          Additions during the period are amortized at one-half the usual rate.

     p)   Capital leases

          Leases that  transfer  the  substantial  obligations  and  benefits of
          ownership  are  recorded  as capital  assets and a related  obligation
          under capital leases.


3.    MARKETABLE SECURITIES

      The Company's  available  for sale  marketable  securities  consist of the
      following:

<TABLE>
<CAPTION>
                                                          ORIGINAL           BOOK          UNREALIZED
                                          NUMBER            COST             VALUE         GAIN/(LOSS)
                                          -----------------------------------------------------------
<S>                                       <C>         <C>               <C>              <C>
      Trackpower Inc.                     3,000,000   $     136,950     $     149,649    $     12,699
      Wireless Age Communications Inc.    1,145,000       1,361,027           812,950        (548,077)
                                          -----------------------------------------------------------
                                                      $   1,497,977     $     962,599    $    535,378
                                                      ===============================================
</TABLE>

      During July,  2004 the Company  received  3,000,000  restricted  shares of
      Trackpower Inc. as partial payment for an amount due from a third party.

      In  September,  2004 the Company  received  700,000  restricted  shares of
      Wireless Age at a market  price of $1.01  through the  disposition  of its
      Battery Business as described in Note 1(c).

      In  November,  2004,  the Company  received  50,000  restricted  shares of
      Wireless Age at a market price of $0.71 pursuant to its earnout  resulting
      from the disposition of its Battery Business as described in Note 1(c).

      The remaining  395,000 shares of Wireless Age were acquired in conjunction
      with the reverse acquisition transaction described in note 1 (b)..


                                      F-12
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


4.    PROPERTY, PLANT AND EQUIPMENT

      Property, Plant and Equipment comprises the following:

      Computers and office equipment - cost                 $      71,671
      Less: accumulated amortization                              (18,544)
                                                            --------------
                                                            $      53,127
                                                            =============

      Included  in the above  property,  plant and  equipment  are assets  under
      capital  lease  with a cost of $61,353  and  accumulated  amortization  of
      $11,898. These leases bear interest at varying rates from 9%-21%.

      The future minimum payments due under these capital leases are:

           Years ending December 31:

           2005                                             $      26,274
           2006                                                    19,348
           2007                                                     5,301


5.    SHORT TERM BORROWINGS

<TABLE>
<CAPTION>
<S>                                                                                   <C>
      Advance from a shareholder, on demand, unsecured and non-interest bearing       $    27,595
      Advance from a party related to the principal shareholder, on demand,
           unsecured with monthly interest of 3%                                           62,250
      Advances from unrelated parties, on demand, unsecured at varying rates              100,422
      Bridge loan, on demand, unsecured with monthly interest payments of 3%              150,653
                                                                                      -----------

      Total                                                                           $   340,920
                                                                                      ===========

6.    NOTES PAYABLE

      Non-interest bearing note payable (a)                                           $    57,500
      5 year non-interest bearing note payable (b)                                         52,225
                                                                                      -----------

      Total                                                                           $   109,725
                                                                                      ===========
</TABLE>

      (a) In 2001, the Company  restructured a $416,821 payable with a creditor,
      whereby $76,821 was forgiven,  $180,000 was satisfied through the issuance
      of 1.8 million shares of the Company's common stock, and a note payable of
      $160,000  was issued and has since been paid down to $57,500.  This amount
      is due on demand and has therefore not been discounted.

      (b) In 2002, the Company issued a non-interest  bearing note payable to an
      affiliate for $120,000 payable over 5 years at $2,000 per month commencing
      July 1, 2002  (this  note was  discounted  to  $106,000  representing  its
      present value using a 5% discount rate and has been paid down to $52,225).
      The Company issued this note as part of the  acquisition of Prime Wireless
      that was later disposed of on March 13, 2003.


                                      F-13
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


7.    8% SENIOR SUBORDINATED CONVERTIBLE DEBENTURES

      The  senior  subordinated   convertible  debentures  totaling  $66,500  at
      December 31, 2004, are  subordinated to all other  indebtedness,  and bear
      interest at 8% payable in arrears annually commencing March 6, 2001.

      The principal portions mature on March 6, 2005. Each $0.25 of principal is
      convertible  into one share of common  stock and one three year warrant to
      purchase an additional share of common stock at an exercise price of $0.50
      per  share.  Management  had  determined  that the value  attached  to the
      conversion   feature  and  the  related  warrants  is  insignificant  and,
      therefore has not made an adjustment to the  debentures'  carrying  amount
      for these features. No payments of interest have been made by the Company.
      The notes are technically in default and therefore have been classified as
      current  liabilities at December 31, 2004.  Subsequent to year-end,  these
      debentures matured and amounts  outstanding were  automatically  converted
      into shares of common stock of the Company (see Note 12 d)).

8.    CAPITAL STRUCTURE

       (a) Authorized:
                2,000  preference   shares  $100  par  value;  8%,   non-voting,
                convertible, redeemable 400,000,000 voting common shares, $0.001
                par value

       (b) Issued and outstanding (Number of shares) at
           December 31, 2004                                     260,689,071



                                      F-14
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


8. CAPITAL STRUCTURE (continued)

     (c)  Warrants:

            The Company has granted 17,508,074 warrants to purchase an aggregate
            of  17,508,074   common  shares.   All  warrants  are  vested.   The
            composition  and  exercise  prices of the  warrants  outstanding  at
            December 31, 2004 are as follows:

<TABLE>
<CAPTION>
                                                      Weighted
                                       Number          average
                                  of warrants   exercise price       Expiry date
           ------------------------------------------------------------------------------
<S>                                <C>               <C>           <C>
           December 31, 2003        8,735,589        $  0.379                  -
           Warrants granted        15,000,000           0.084                  -
           Warrants expired        (6,227,515)         (0.500)                 -
           ------------------------------------------------------------------------------
           December 31, 2004       17,508,074        $  0.193                  -
           ------------------------------------------------------------------------------
           Comprised of:            1,000,000        $  0.020       February 28, 2005
                                    1,250,000           0.040       November 14, 2005 (a)
                                   15,000,000           0.084            July 7, 2006 (b)
                                      102,172           0.500         August 13, 2006
                                       77,951           0.500         October 8, 2006
                                       77,951           0.500       November 20, 2006
           ------------------------------------------------------------------------------
                                   17,508,074        $  0.193                  -
           ------------------------------------------------------------------------------
</TABLE>

           (a) Includes  warrants to purchase  1,250,000  common shares at $0.04
           per  share  issued  under  a  warrant  agreement  for  which  another
           1,250,000 warrants,  exercisable at $0.10 per share are issuable upon
           exercise of the initial warrants.

            (b) Warrants  issued on July 7, 2004 in connection  with the Reverse
            Acquisition  described  in note 1b) to  purchase  15,000,000  common
            shares at $0.084



                                      F-15
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


8. CAPITAL STRUCTURE (continued)

     (d)  Stock options:

            In connection  with the Reverse  Acquisition  described in note 1b),
            the  Company's  stock option plan was amended to increase the number
            of options to be issued  under the plan from a maximum of  3,000,000
            options to a maximum of 20,000,000 options.

            Options granted under the amended plan are being accounted for under
            Accounting  Principles  Board  Opinion No. 25 (APB  Opinion No. 25),
            "Accounting  for Stock Issued to  Employees".  All options have been
            granted at a price  equal to or  greater  than the fair value of the
            Company's common stock at the date of the grant.

            A summary of the changes in the Company's  stock option plan for the
            years ended December 31, 2004 and December 31, 2003 is as follows:

<TABLE>
<CAPTION>
                                                                      Year Ended                        Year Ended
                                                               December 31, 2004                 December 31, 2003
           --------------------------------------------------------------------------------------------------------
                                                                        Weighted                          Weighted
                                                       Number            average           Number          average
                                                    of shares     exercise price        of shares   exercise price
           --------------------------------------------------------------------------------------------------------
<S>                                                 <C>                   <C>           <C>                   <C>
           Balance at beginning of period           1,000,000             $0.12         1,150,000             $0.13
           Options granted                         11,000,000 (a)          0.01                 -                 -
           --------------------------------------------------------------------------------------------------------
           Options cancelled                         (400,000)            (0.10)         (150,000)            (0.25)
           --------------------------------------------------------------------------------------------------------

           BALANCE, END OF PERIOD                  11,600,000              0.02         1,000,000              0.12
           --------------------------------------------------------------------------------------------------------

           EXERCISABLE, END OF PERIOD              10,988,889             $0.02         1,000,000             $0.12
           --------------------------------------------------------------------------------------------------------

<CAPTION>
                                                                        Weighted         Weighted         Weighted
                                   Number             average            average           Number          average
              Exercise         of options      remaining life           exercise       of options         exercise
               Price          outstanding             (years)              price      exercisable            price
           -------------------------------------------------------------------------------------------------------
<S>                            <C>                        <C>              <C>         <C>                   <C>
                   $0.01       11,000,000 (a)             2.13             $0.01       10,338,889            $0.01
                    0.10          500,000                 6.66              0.10          500,000             0.10
                    0.25          100,000                 0.08              0.25          100,000             0.25
          ---------------------------------------------------------------------------------------------------------
           $.01 - 0.25         11,600,000                 2.31             $0.02       10,988,889            $0.02
          ---------------------------------------------------------------------------------------------------------
</TABLE>

         (a)  Options  issued on July 7,  2004 in  connection  with the  Reverse
         Acquisition  described in note 1b) to purchase 11,000,000 common shares
         at $0.0114 per common share



                                      F-16
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


9.    RELATED PARTY TRANSACTIONS

      On  January  23,  2004,  the  Company   transferred  50,000  Wireless  Age
      Communications,  common shares (marketable  securities) to a related party
      (related  by  virtue  of their  ownership  position  in the  Company),  in
      repayment  of a promissory  note of  $162,000.  The Company also agreed to
      adjust the number of shares in event that the closing  share price is less
      than $3.00 on the earlier of; i) the date which the shares  become  freely
      trading  under  securities  legislation,  or ii) the date the  shares  are
      freely tradable under a registration statement.

      Officers, and certain persons related to officers have provided $35,903 in
      a prior period to fund operations of the Company. This loan is included in
      short term borrowings.  It is unsecured,  non-interest  bearing and has no
      formal repayment terms.


10.   INCOME TAXES

      The company  files US Federal  income tax  returns for its US  operations.
      Separate  income tax returns are filed, as locally  required,  for each of
      its foreign subsidiaries.

      There was no provision  for income taxes for the years ended  December 31,
      2004 and 2003.

      The total  provision for income taxes differs from that amount which would
      be  computed  by  applying  the  income tax rate to income  (loss)  before
      provision  for income  taxes.  The  reasons for these  differences  are as
      follows:

<TABLE>
<CAPTION>
                                                      2004                       2003
                                                     Amount         %          Amount          %
                                                -----------      -----     ----------      -----
<S>                                             <C>              <C>       <C>              <C>
Statutory income tax rate (recovery)            $ (512,600)      (36)      $ (50,900)       (18)
Foreign Taxes Payable                                   ---         0             ---          0
Non-deductible items                                  1,600         0             700          1
Use of losses carried forward                           ---         0             ---          0
Other, including valuation
      Allowance adjustment                          511,000        36          50,200         17
Net taxes (recovery) and effective rate              $  ---         0          $  ---          0
</TABLE>


                                      F-17
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


10. INCOME TAXES (continued)

      The  Company  recognizes  deferred  tax  liabilities  and  assets  for the
      expected  future tax  consequences  of temporary  differences  between the
      carrying  amounts  and the tax basis of  assets  and  liabilities  and net
      operating loss carry-forwards.  Temporary  differences and carry-forwards,
      which give rise to deferred tax assets and liabilities are as follows:

<TABLE>
<CAPTION>
                                                          2004                           2003
                                                Component      Tax Effect      Component     Tax Effect
                                                ----------     ----------      ---------     ----------
<S>                                             <C>            <C>             <C>            <C>
        Net operating losses - domestic         $2,100,000     $ 714,000             ---           ---
        Less valuation allowance                (2,100,000)     (714,000)            ---           ---
        Net deferred asset                             ---           ---             ---           ---

        Net operating losses - foreign          $1,750,000     $ 630,000        $751,000      $140,000
        Less valuation allowance                (1,750,000)     (630,000)       (751,000)     (140,000)
        Net deferred asset                             ---           ---             ---           ---
</TABLE>

      As December  31,  2004,  the Company had  cumulative  net  operating  loss
      carry-forwards  of  approximately  $2,100,000 and $1,750,000 in the United
      States and Canada respectively. These amounts will expire in various years
      through 2021. The related deferred tax assets have been completely  offset
      by a valuation  allowance.  The Company has no  significant  deferred  tax
      liabilities.


11.    COMMITMENTS AND CONTINGENCIES:

       (a) Commitments:

          The Company is committed to the following annual amounts in respect to
          its lease of office space:

           Years ending December 31:

           2005                               $   34,772
           2006                                   38,746
           2007                                   42,720
           2008                                   46,695
           2009                                   11,922



                                      F-18
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


11. COMMITMENTS AND CONTINGENCIES (CONTINUED):

     (b)  Contingencies:

           Pursuant to the Reverse Acquisition  Transaction  described in note 1
           b),  the  outstanding   shares  of  common  stock  of  Phantom  Fiber
           Corporation,   being  comprised  of  pre-merger  stockholders  owning
           137,410,735  shares  of  common  stock  and  pre-merger   convertible
           debenture  holders  having the  equivalent  of  30,000,000  shares of
           common   stock,   automatically   converted   into  an  aggregate  of
           167,410,735 shares of the Company's common stock which represented 64
           percent of the Company's outstanding voting stock after giving effect
           to the merger.

           The  valuation  of and for the  share  exchange  was  based  upon the
           Company  having a  specified  level of  working  capital  to fund its
           operations on a post-merger  basis to December 31, 2004. In the event
           of a  shortfall  from the  specified  level of working  capital,  the
           pre-merger  stockholders of Phantom Fiber Corporation may be entitled
           to a maximum of 40,000,000 compensatory shares of common stock of the
           Company.  The current management of Company is negotiating terms with
           respect to this working capital requirement.


12.   SUBSEQUENT EVENTS

     a)   Private Sales Transaction

          On  January  13,  2005,  the  Company  entered  into a  private  sales
          transaction with a former officer, director and shareholder of Pivotal
          Self-Service  Technologies  Inc.  under  which the  Company  agreed to
          deliver 800,000 shares of common stock of Wireless Age  Communications
          Inc. for cash consideration of $600,000 and 3,000,000 shares of common
          stock of  Trackpower  Inc. for cash  consideration  of  $150,000.  The
          transaction, as amended March 30, 2005, provides for periodic delivery
          of these shares in quantities  proportionate to cash payments received
          as a percentage of the total proceeds of the transaction.  As at March
          31, 2005, the Company has received $324,200 under this transaction and
          has  delivered   345,813  shares  of  common  stock  of  Wireless  Age
          Communications Inc. and 1,296,800 shares of common stock of Trackpower
          Inc.

     b)   2005 Stock Option,  SAR and Stock Bonus Consultant Plan and Conversion
          of Debt

          On February 11, 2005, the Company  announced a 2005 Stock Option,  SAR
          and Stock Bonus  Consultant Plan (the "S-8 Plan") which authorized the
          Company  through  the  Committee  that  administers  the S-8 Plan (the
          "Committee")  to grant  non-qualified  stock  options  with or without
          stock appreciation  rights,  SAR's and stock bonuses to consultants of
          the  Company.  There are  17,500,000  shares  of  common  stock of the
          Company  available  for  grant  to  participants   designated  by  the
          Committee.  Directors,  officers and  employees of the Company are not
          eligible  to  participate  in this S-8  Plan.  As at March  31,  2005,
          6,520,719  shares of common stock have been issued from this S-8 Plan,
          of which  approximately  5.1 million common shares have been issued to
          various  creditors in satisfaction of approximately  $250,000 of trade
          and other liabilities outstanding as at December 31, 2004.


                                      F-19
<PAGE>

PHANTOM FIBER CORPORATION
Notes to the Consolidated Financial Statements
For the Year Ended December 31, 2004
================================================================================


12. SUBSEQUENT EVENTS (continued)

     c)   Settlement with Former Affiliate

          On January 23, 2004,  the Company  transferred  50,000 of the Wireless
          Age shares to an  affiliate  of the Company who had provided a loan of
          $162,000 per note 9 to the Company in November  2002.  The transfer of
          these  shares was in payment of the loan.  The Company  also agreed to
          adjust the number of shares in event that the  closing  share price is
          less than $3.00 on the earlier of; i) the date which the shares become
          freely  trading  under  securities  legislation,  or ii) the  date the
          shares are freely tradable under a registration statement.

          On February 18, 2005,  the Company  negotiated a final  settlement  of
          this  matter  under  which it  agreed to issue  500,000  shares of its
          capital  stock at a deemed  value of $30,000  and  transferred  75,000
          shares of common stock of Wireless Age Communications Inc. at a deemed
          value of $53,250. This aggregate amount of $83,250 has been accrued as
          a settlement  of loan  obligation  in the  statement of  operations at
          December 31, 2004.

     d)   Maturity  and  Conversion  of  8%  Senior   Subordinated   Convertible
          Debenture

          Upon maturity of the 8% Senior Subordinated  Convertible Debentures on
          March 6, 2005, each $0.25 of outstanding  amounts under the debentures
          became  subject to an  automatic  conversion  into one share of common
          stock and one three year  warrant to purchase an  additional  share of
          common stock at an exercise  price of $0.50 per share.  As at March 6,
          2005, the outstanding  amounts under the debentures  which are subject
          to this automatic  conversion amounted to $93,170,  being comprised of
          outstanding  principal of $66,500 and unpaid interest of $ 26,670. The
          Company has reserved 372,865 shares of common stock in relation to the
          conversion of outstanding amounts under the debentures.


                                      F-20

<PAGE>

                                   SIGNATURES

          In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its

April 13, 2005                    PHANTOM FIBER CORPORATION

                                  By: /s/ Jeffrey T. Halloran
                                      --------------------------------------
                                      Jeffrey T. Halloran
                                      Chief Executive Officer and President


April 13, 2005                    By: /s/ Vince Bulbrook
                                      --------------------------------------
                                      Vince Bulbrook, Chief Financial Officer
                                      and Principal Accounting and Financial
                                      Officer,

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

April 13, 2005                    By: /s/ Jeffrey Halloran
                                      ---------------------------------------
                                      Jeffrey Halloran, Chief Executive Officer,
                                      President and Director

April 13, 2005                    By: /s/ Vince Bulbrook
                                      ----------------------------------------
                                      Vince Bulbrook, Chief Financial Officer,
                                      Principal Accounting and Financial Officer
                                      and Director

April 13, 2005                    By: /s/ Gordon S. Fowler
                                      ----------------------------------------
                                      Gordon S. Fowler, Director

April 13, 2005                    By: /s/ John G. Simmonds
                                      ----------------------------------------
                                      J. Graham Simmonds, Director


SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(D) OF THE EXCHANGE ACT BY NON-REPORTING ISSUERS

         The registrant is a reporting issuer under the Exchange Act and,
therefore, this section is not applicable.



                                       20